Jan 18, 2019 in Analysis
Position Paper

It is becoming increasingly apparent that business is not only the matter of money. It is a powerful social, economic, and even ethic factor. Obviously, such industry as healthcare belongs to the segment of business which implies deep ethical considerations. Still, there has been little agreement on the pricing and reimbursement policies in healthcare. As a consequence, it means that citizens suffer from excessively high prices for medical services. The trend is not threatening yet, but it is a growing economic and social problem. Even more, a wide range of regulations have made the industry hardly competitive at the external level. Taking all these points into consideration, it is to be said that the current paper lingers upon the description and discussion of the pricing and reimbursement policies from the perspective of the mid-size healthcare organization at the south-west.

To be more specific, the following paper explains a required alignment of Chargemaster as the primary factor regarding the price-making aspect. Then, the study outlines the strategy for making an effective public announcement in order to make community aware of newly implemented policies. Further, this paper justifies the key competitors’ need to follow a provided example as long as this issues addresses some global perspectives. Eventually, this study outlines a strategy for reimbursement for uninsured patients via redirecting revenue from insured clientele. It is important to emphasize that the paper is particularly focused on the ethical consideration providing that it is a source of improvement of economic, legal, and social aspects, as well. As the thesis and the layout of the paper have been outlined, it is necessary to proceed to the next section.     


Speaking about the alignment of Chargemaster, first of all it is important to admit that all prices have to correlate with Medicare discounts. To be more specific, Chargemaster has to add 50% of price including the reimbursement of Medicare. It will make prices more affordable for all patients because the current prices are excessively high. One may argue that it is not a reasonable decision because the healthcare organization will not make enough profits, especially with the opposite pricing policy of the competitors (Brill). In fact, Chargemasters’ layouts of the healthcare organizations are not consistent with each other as long as every single company guides itself in accordance with specific rules. What is more, healthcare is a peculiar segment of business, which presupposes deep ethic consideration. Thus, paying attention to the patients should be the primary objective without any respect to revenue rates. 

Taking this point into account, it is to be said that healthcare business does not have to be excessively proactive. Patients will pay the rest of their money in order to get a treatment and even save their lives. Hence, healthcare business is not a matter of money. Namely, a healthcare organization should not attempt to make a maximum of profit from every single patient. Regarding this issue from the perspective of entrepreneurship, people will always face various diseases so that a regular customer flow is the main source of income for healthcare organizations. Therefore, a healthcare organization has to focus on the efficiency and reasonable pricing policy. As a result, the customer segment will broaden because patients obviously choose affordable and effective treatment. Again, this strategy differs from the strategies of the majority of the competitors. The healthcare organizations will escape its competitors and perform in terms of a so-called random walk theory, which does not consider the actions of competitors and changes at stock markets.

Even more, effective and cheap treatment will guarantee the constant patient flow from the perspective of flexible reimbursements. Providing that reimbursement comprises 75% of the Chargemaster price, the majority of patients will not change the healthcare company as the reimbursement nearly restores their expenses on treatment. Subsequently, a healthcare organization should provide 25% discount for every repeated kind of medical services: analyses, tests, injections, pharmaceutical products, and so on. In such a way, the customers will not change healthcare organization as they are confident about their ability to proceed with their treatment. Besides that, a healthcare organization will motivate itself to provide efficient services. Eventually, the difference in customer flows is illustrated in figure 1, which describes the following. For instance, a competitor charges a patient with $139 for anti-pneumonia injection while the discussed organization charges its patients with $70. Providing that five patients accepted the services of a competitor, they will go to the discussed organization as they do not want to pay more. Still, such plain strategy requires a meaningful public announcement.



Public Announcement

As long as an organization has to make an effective public announcement, it is necessary to conduct the following procedures. First of all, the organization should design a promo page, which can be placed in local newspapers, magazines, and websites (in social networks especially). The promo page is supposed to include clear and detailed information about new pricing policy and available discounts for potential customers. Doubtless, the text for the promo page does not have to look like advertising. For that reason, it is recommended to design the promo page as an article or newsletter. The first variant should include some useful information about taking care of health. Below, the promo page has to present the organization offering cheap and effective healthcare services ; the description of pricing and discount policies should be provided as well. A newsletter should simply inform about new pricing policy and discounts available. Besides that, both variants must include an invitation to a free public exhibit of the organization.

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However, this event should not be called an exhibition. It has to be presented as a social event, which is devoted to new pricing policy and discounts available. To start with, a speech should be delivered in public in order to heighten social awareness (Smith). Then, the visitors are supposed to be shown around. It is worth emphasizing that all facilities, equipment, and other abilities of the organization have to be described in detail, including their pricing and possible discounts. Namely, potential customers need to know what exactly the will pay for. Further, a final public speech should be made. Subsequently, it is important to give the visitors the chance to ask questions in order to verify their awareness. Eventually, the organization has to treat the visitors with samples of healthy food, which is served for the patients.

Third, simultaneously with promo actions and prior to the social event, the organization is required to launch a meaningful social advertising campaign. It can include videos and promo pages, which encourage people to take care of health and live a healthy lifestyle. Though, these commercials do not have to show any prices, offers, or brand names. In fact, the organization has to be positioned as the initiator of healthy movement. In other words, none of its services should be advertised in these commercials. As for the placement, social networks and personal blog of the organization are the best places for this sort of advertising because the majority of potential customers use Internet on a day-to-day basis. The following graph clearly illustrates that.


Fig. 2. (Redsicker)

Inducement of Competitors

Regarding the inducement of the competitors, it is to be said that the organization has to inform  them about its success in newly implemented policy. The organization is supposed to initiate a corporate presentation, which will describe the process of the implementation and outcomes of new marketing strategy. Needless to say, the competitors should have an opportunity to express their suggestions and concerns. Furthermore, the organization can offer benchmarking or partnership in terms of the implemented marketing strategy. One may argue that it is a preposterous idea to offer the strategy to the competitors, but the organization seeks the solution of the global problem, which affects the market, as well. In addition, if the rest of the competitors accept this strategy, it will give the organization full leadership of the newly amended market a priori. 

Having considered this point, the entire segment of healthcare can unite in order to generate an appropriate response from the government. To be more specific, the entire segment will be able to call for the increase of the governmental support. First of all, it should refer to the supply of pharmaceutical goods and feasibility of certifying. As for the certifying, it does not have to change its requirements, but its legal perspective has to be simplified considerably. In response, the healthcare segment will pay higher taxes, and the responsibility for the standard negligence will be more severe. As a consequence, the market will still benefit: the customer flow will not decrease. The primary requirement for the entire market is to provide affordable and reliable treatment of the patients because the ethic consideration is still the most significant reason for suggesting such drastic changes within the market. Regarding the percentage of south-western market, it is a meaningful to the national healthcare industry.

As it has been mentioned before, these changes can influence the entire healthcare industry. The final objective of these changes is more customer-driven market and increase in the governmental involvement. Namely, the healthcare industry needs the governmental guidance in order to follow high standards and service patients at reasonable prices. In consequence, the ethic consideration will become the central item of the industry positioning. As the recent statistics witness, the south-western region is not the least uninsured. Still, the health insurance is quite an expensive necessity, and the situation in the north-eastern part of the U.S. keeps worsening:


Fig. 3.

All in all, it is the main argumentation for the inducement of the key competitors of the organization.

Reimbursement Strategy

Concerning the reimbursement strategy of the organization, it is essential to note that it has to be focused on the support of the uninsured patients. In fact, it is quite a considerable part of the entire customer segment. Regarding the ethic consideration and possibility to widen the customer flow, the organization should redirect a certain percentage of revenue from insured patients. Again, it will not affect the overall income of the firm drastically while a new target segment will be attracted to the organization. The organization has to redirect 40% of revenue from insured patients so that uninsured customers will be able to cover their treatment at least partially. Doubtless, this strategy also refers to the ethic consideration of the organizations’ positioning. Besides that, this approach is reasonable in terms of marketing, as well. Thus, it is pivotal to describe it from the marketing perspective. 

Actually, an organization can initiate a partnership with a health insurance company in order to support uninsured patients. The organization pays 50% of the initial price and thus, provides the health insurance company with clientele. As a result, the organization should just cover the insurance while the rest of reimbursement procedures are the responsibility of the health insurance company. Though, this policy has to refer to the patients, who are under the long-term treatment as it requires high costs. Needless to say, the organization as well as patients will benefit because the long-termed treatment will be considerably cheaper. Figure 4 illustrates the difference between the customer flow of the uninsured patients and the patients, who received insurance from the organization.


Fig. 4.

As the graph describes, previously uninsured patients are tending to accept the offer of the organization as long as it takes the responsibility to insure them during the period of their treatment. 

In consequence, this strategy addresses the terms of the governmental hospital reimbursement. Namely, this program reimburses daily hospital expenses for every single patient (Niles). By the same token, the organization can charge the uninsured patients and the patients, who need a long-termed treatment or whose health condition has not improved after the previous course of treatment. In such a way, the patients, who cannot afford insurance, can accept the offering of treatment with the payment per diem. On the contrary, it may seem to contradict the strategy, which has been outlined above. Still, such deviation renders a wider choice for the target segment. What is more, this approach presupposes servicing of all strata of citizens. Hence, the organization supports its orientation towards ethic consideration. All in all, the reimbursement strategy aims at the achievement of the ethics-driven objective, broadening of the target segment, and initiating considerable reforms at the state level.     


The current paper has lingered upon the description and discussion of the reimbursement policy development for the healthcare organization. To be more exact, the study has given an account of the alignment of Chargemaster as it is the main factor concerning the costs policies. Then, the paper has tackled the public relation perspective of the suggested pricing alignment. Furthermore, the work has given an account of the inducement of the key competitors to follow the outlined procedure. Eventually, the study has suggested the strategy regarding new reimbursement policy, which addresses the needs of uninsured patients via redirection of some revenue’s percentage from insured clientele. All sections have been provided with illustrations and graphs, which depict the key points of the related aspects. As a result, the study has made a conclusion, which is the following.  

The pricing and reimbursement policies are the central issue of the contemporary healthcare segment. Actually, the society is facing a strong pricing pressure concerning the services of healthcare organizations. Unfortunately, the reason is quite clear. People will always feel concerned about their health and even life so money is not an object in such cases. In consequence, many entrepreneurs benefit from it. In a like manner, there is a complicated issue about governmental involvement and regulation of the industry. Doubtless, it focuses on high standards of performance, but numerous requirements to the financial and resource procedures are quite complicated. As this study has revealed, it is the core of the problem: complicated system demands enormous costs. As a result, a certain percentage of the U.S. citizens cannot afford healthcare services. In fact, healthcare has become a matter of business rather than intention to help people. It is rather ethic consideration so that this study has attempted to convey such an assumption. Still, it is a problem which addresses issues far beyond its evident extent.    



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